Switzerland selected Lockheed Martin's (LMT) F-35 for a $6.5 billion fighter contract, beating offerings from Boeing (BA) and Airbus (EADSY). Defense stocks rose.
XIn addition to the F-35, Boeing's F/A-18 Super Hornet, Airbus' Eurofighter and Dassault's Rafale were among the competing aircraft.
Swiss voters approved a plan to spend $6.5 billion on the "Air2030" program by a razor-thin margin of 50.2% in October.
The government will procure 36 F-35A variants to replace the Swiss Air Force's Boeing F/A-18s Hornets and Northrop Grumman (NOC) F-5 Tigers which are scheduled to go out of service in 2030.
Switzerland is the 15th nation to join the F-35 program of record, according to Lockheed. The company added that the F-35s will be tailored to Swiss autonomy requirements and will include a training program. Swiss industry also will be able to participate in research and development, production and sustainment deals.
The F-35 was the winner in technical criteria, the Swiss broadcaster SRF said last week. But some cabinet members reportedly preferred a European-built jet like the Eurofighter or Rafale, which is French. The stealthy F-35 was the only fifth-generation fighter in the contest, with the others being less advanced fourth-generation fighters.
The four fighters as well as Saab's Gripen are also jockeying for an $11 billion Finnish order expected later this year. Finland's contract will be one of the biggest air-armament acquisitions in Europe.
Lockheed shares rallied 1.3%, and Boeing stock rose 1.6% on the stock market today. General Electric (GE), which makes the engines on the Super Hornet, gained 2.8%. Raytheon Technologies (RTX), which makes the engines on the F-35, added 1%. Top F-35 subcontractor Northrop picked up 0.9%.
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Swiss President Guy Parmelin noted the fighter competition came up during a meeting with President Biden in Geneva earlier this month.
"Mr. Biden recalled the excellent quality of the two U.S. planes," Garmelin said. "I reminded him that we have a process underway, which was decided on long ago, and that the government will reach its decision based on the process currently underway."
In October, the U.S. State Department notified Congress of the possible sale of up to 40 Boeing Super Hornets, 40 Lockheed F-35A fighters to Switzerland, contingent on a contract award.
Winning the Swiss contract would provide a significant boost to the U.S. defense stocks.
According to the Defense Security Cooperation Agency at that time, 40 F-35s for Switzerland would have an estimated cost of $6.58 billion. The F/A-18 Super Hornets would cost $7.45 billion.
Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more.
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